An investment can be considered in the stock of PVR Ltd, one of the country’s larger multiplex chains. The stock trades at 18 times its estimated financial year 2008 per-share earnings and at about 12-13 times estimated financial year 2009 earnings, assuming conservatively that growth rates will halve from historic levels.
PVR appears quite capable of delivering such growth rates, given its aggressive plans to add screens, its superior track record in execution and a healthy film production pipeline that will ensure steady content supply. It’s own foray into co-production and other businesses also holds promise.
PVR reported a 40 per cent growth in revenues to Rs 116 crore and 80 per cent growth in net profits in the first half of the financial year 2008 A significant driver of margin expansion in recent quarters has been the waiver of entertainment tax for some of its multiplex properties. However, we expect PVR to maintain its margins. With 23 multiplexes or 89 screens under the PVR Cinemas circuit, it is likely to add 37 screens over the next three quarters. It has a particularly strong presence in Delhi and the NCR regions, which means it has access to premium real estate.
Forays into other regions might come at relatively lower rental costs. PVR now claims to account for at least 10 per cent of domestic theatrical revenues. Shorter film runs have resulted in a higher distributor share, but PVR has so far managed to maintain this share at about 30 per cent of gross ticket sales. It also has a favourable revenue mix, with only 60 per cent of its revenues coming from box office sales.
About 20 per cent of its revenue is derived from sale of food and beverages.
The company’s subsidiary PVR Pictures has gained traction in the distribution business. PVR is also foraying into food courts business through a joint venture with the Dabur group.
Use of the joint venture route and the measured pace of expansion into new areas lend confidence. We, however, have not factored in any gains from these businesses.
Thursday, November 15, 2007
PVR Ltd: Buy
DLF to buy ultra-luxury Amanresorts for $250 mn
First overseas buy by India's largest real estate company.
DLF Ltd is acquiring the privately-held super luxury resorts and spa chain Singapore-based Amanresorts for around $ 250 million.
This will be the first overseas acquisition by India's largest real estate company, which recently went public.
Sources close to developments said at $250 million, the deal is being concluded at an extremely conservative valuation. In addition to this payout, DLF will assume debt of approximately $220 million as part of the deal.
DLF, the country’s largest realty firm by market capitalisation at over Rs 1,48,527 crore, had announced a month ago that it intends to raise $750 million overseas for acquiring and developing properties abroad. Part of the proceeds would be used for funding the Amanresorts acquisition.
The $220 million debt will remain on the Amanresorts balance sheet and be paid off from its future revenues.
The 20-year-old Amanresorts has 18 operational properties under its belt in Indonesia, Cambodia, Sri Lanka, Morocco, Bhutan, India, the Philippines, the United States, French Polynesia and France.
All Amanresort properties have a room tariff of over $600 per night, giving it a hugely exclusive tag. Since very few of these properties have more than 50 or 60 rooms and villas, the chain functions on the lines of a lifestyle resort for the rich and famous.
Singapore-based Silverlink Holdings holds a majority stake in Amanresorts and will completely exit the company after the acquisition. It is believed that the founder, Adrian Zecha, will also move on from the chain after the takeover.
The acquisition also entails DLF taking over a prime property at Delhi’s Lodhi Road. Amanresorts had bought this property from the India Tourism Development Corporation five years ago for Rs 76.22 crore.
The old building has been demolished and a new one, currently under construction, should be operational in another six months.
Being developed as a super-luxury resort, room tariffs at the property are also expected to range between $600 and $700 per night, making it one of the most expensive hotel rooms in the country.
"DLF is getting an opportunity to gain access to the super-luxury hospitality market with this acquisition. The Aman brand name will continue even after the acquisition," said a company executive, who declined to be identified.
DLF forayed into hospitality last year. It has a 74:26 joint venture agreement with Hilton International for developing 50 to 75 properties in the long term.
DLF’s initial roll out plan in India includes eight to 10 luxury hotels (it has also tied up with the Four Seasons for a property overlooking the DLF Golf & Country Club at Gurgaon), 25 or 30 business hotels and 10 to 15 serviced apartments
Saturday, November 10, 2007
Friday, November 9, 2007
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